For starters let us explain what debt settlement is. Debt settlement is a process of defaulting on unsecured debts to then later on work out a settlement to pay back the original debt balance owed at a much smaller amount. This procedure can save a consumer somewhere around 50% of the debt they have to pay back. In addition they can look ahead to becoming free of burdening credit card debts within two years. Now the debt settlement process can be done two ways, either retain a debt settlement company or a credit card debt reduction law firm to enroll you into a debt settlement program. This short article will delve into the differences between the two.

Like anything else in life debt settlement has it's ups and downs. The good thing is the enormous savings of money and time. The bad parts are falling past due on the debts, collection activity and the possibility of a lawsuit. A law firm practicing debt settlement has more beneficial securities to offer than the regular debt settlement company.

A lot of consumers' major worry is that of being sued. To begin I want to let everyone understand that it is not common practice for the collectors to sue, but it is a possibility. Over ninety percent of people who end up going into past due status will never end up getting summonsed to go to a courtroom. However in the situation that you get sued you want to make certain to yourself that the company you hire can still assist you. With a debt settlement company if one of their customers gets sued there is nothing at all they can do for them. It is UPL (unauthorized practice of law) for these companies to either advise or contact the collector attempting to sue their client. Now if that same consumer was the client of a law firm negotiating for them to settle their bills the law is different. A law firm by law can still call and work out a settlement to keep the client from ever having to step into a courtroom. This is a much easier avenue for the creditor to get paid as opposed to actually having to go to court.

The next issue of debate involving settlement companies and law firms is how the collection calls are taken care of. Part of the debt settlement procedure is the consumer must go into default in order for the collector to be willing to settle. Now these collectors do not just roll over and play dead, you will assuredly be getting collection calls to some extent. A debt settlement company can't do a thing about the collectors calling. But a law firm can release to them a statement of attorney retention to force the collectors by law to deal only with the law firm and not the client in in an attempt to collect the debt.

One more issue to think about is that law firms have to report to a higher authority in order to stay in business, the State Bar Association. This gives the client more peace of mind that they will be represented appropriately throughout the debt settlement process. A debt settlement company must answer to no one.